Daily Brief Energy/Materials: CPMC Holdings, Crude Oil, Sanil Electric, Rio Tinto Ltd, DFR Gold and more

• ORG purchased 27% of CPMC’s shares at HK$6/share in 2015.After about eight years, Baosteel’s Offer Price was only HK$6.87/share. The annualized return rate was low, which obviously cannot satisfy ORG.
• Baosteel and CPMC have been in talks for a long time – There may have been some “tacit agreement” between the two parties. The approval process is smooth so far.
• For acquisitions/consolidation between SOEs, private enterprises usually have limited chances of winning.ORG has financial pressure and the approval process face uncertainties. There would be more negotiations among CPMC, ORG, Baosteel.

• Occidental trades at higher PE and PB valuations than Exxon Mobil, Chevron, Shell, TotalEnergies, and BP. European oil majors are cheaper than American peers.  
• Occidental has been the Permian Basin’s leading oil and gas producer for the past five years. 
• Occidental expects to close the USD 12 billion CrownRock acquisition by August. The deal is anticipated to boost its oil output by 170k bpd. 

• Sanil Electric (062040 KS), a Korean industrial transformer manufacturer, is seeking to raise up to US$165 million.
• In Sanil Electric IPO: The Bull Case, we highlighted the key elements of the bull case. In this note, we outline the bear case.
• The bear case rests on rapidly slowing growth, high customer concentration, mid-tier revenue growth and mid-tier FCF margin compared to peers.

• Discounts to NAV of covered holdcos didn’t follow a clear trend during June. Discounts to NAV: C.F.Alba, 44.5% (vs. 46.8%); GBL, 43.6% (vs. 42.9%); Heineken Holding, 18.4% (vs. 18.3%); 
• Industrivärden C, 2.4% (vs. 2.5%); Investor B, 9.9% (vs. 12%); Porsche Automobile Holding, 35.8% (vs. 35.3%). Rio DLC spread tightened to 20.7% (vs. 23%).
• What seems interesting: Porsche SE vs. listed assets and the Rio DLC (long RIO LN/short RIO AU).

Edison Investment Research is terminating coverage on Oxford Cannabinoid Technologies (OCTP), Britvic (BVIC), Ultimovacs (ULTI), DFR Gold (DFR), The Merchants Trust (MRCH), PB Holding (PBH) and Biodexa Pharmaceuticals (BDRX). Please note you should no longer rely on any previous research or estimates for this company. All forecasts should now be considered redundant. Previously published reports can still be accessed via our website.